A command economy is where supply and price are regulated by the government rather than market forces . Government decides which goods and services are produced and how they are distributed. The contrast economic system is the market economy.
Examples Of Command Economies
North Korea
Cuba
Russia
Libya
Iran
Command Economy is based on a central planning. Every input, every output, every intermediate good, every worker, every resource is allocated based on a predetermined plan.
In a Command economy, the Market is not in effect. Without the Market, there is no consumer preference and resources will be mis-allocated; therefore there will either be a shortage or a surplus.
Advantages
Creates an equal distribution of wealth
Stable
Government can act on problems quickly (Does not have to wait for market forces)
Command Economy/Planned Economy
A command economy is where supply and price are regulated by the government rather than market forces . Government decides which goods and services are produced and how they are distributed. The contrast economic system is the market economy.
Examples Of Command Economies
North Korea
Cuba
Russia
Libya
Iran
Command Economy is based on a central planning. Every input, every output, every intermediate good, every worker, every resource is allocated based on a predetermined plan.
In a Command economy, the Market is not in effect. Without the Market, there is no consumer preference and resources will be mis-allocated; therefore there will either be a shortage or a surplus.
Advantages
Creates an equal distribution of wealth
Stable
Government can act on problems quickly (Does not have to wait for market forces)
Disadvantages
No incentive for innovation
Little freedom
Individuals have no control over goods
Misallocation of resources
Poor quality of prodcuts
Economics in the News
http://news.bbc.co.uk/2/hi/country_profiles/1131421.stmReference
http://www.amosweb.com/cgi-bin/awb_nav.pl?s=wpd&c=dsp&k=command+economyhttp://socyberty.com/economics/the-advantages-and-disadvantages-of-traditional-command-and-market-economies/